Federal Grants for First Time Home Buyers

Many Americans dream of owning their own home. The federal government realized that one of the biggest obstacles people faced in trying to attain their goal of homeownership was the capacity to maintain their household and, at the same time, amass the funds required for a down payment and closing costs. To address the issue, the government developed a variety of federal grants for first-time homebuyers.

Function

Many grant programs have been made available through the Department of Housing and Urban Development (HUD). Generally, grants for first-time homebuyers are not paid directly to individuals, but are administered through nonprofit organizations and state and local government agencies.

History

In 2004, Uncle Sam introduced the American Dream Downpayment Initiative Program (ADDIP). It provided $200 million in grants to numerous communities throughout the United States and assisted more than 40,000 families. The average grant totaled $5,000 and funding was provided through 2007. The current initiative funded by Uncle Sam is the American Recovery and Investment Act, which provided grant money for first-time homebuyers in the form of tax credits up to $8,000 for individuals and a maximum of $15,000 for couples.

Considerations

Generally, in order to qualify for one of the federal grants for first-time homebuyers it is necessary to meet certain qualifications. The conditions that must be satisfied may vary depending on the grant program. Qualifications may include factors such as income, no foreclosures on your record, no tax liens, cannot have owned a home in the last three years and you must qualify for a mortgage. In addition, you may be required to attend a HUD approved housing seminar or counseling class.

Time Frame

You need to be aware of the fact that it is common for many of the federal first-time homebuyer programs to run out of money fairly quickly. You should make your application as soon as possible. Also, there may be a deadline associated with closing the deal on your home purchase, such as the Dec. 1, 2009, deadline for the tax credit that is being offered as part of the federal government 2009 economic stimulus package.

Warning

You should make sure that you understand the details contained in the fine print of federal grant programs for first-time homebuyers. Purchasing a home with the assistance of one of these programs usually carry with it specific obligations that you must meet in order to receive the full benefit of the grant program.

For example, you may be required to live in the home for a certain number of years. If you sell the property before the time period expires, you have to pay back the amount of the full grant. If you are not sure of what your obligations are you should consult an attorney to assist you through the process.

References

• First Time Home Buyers
• ADDIP Fact Sheet